Mali's mining legislation has the particularity of having an "overproduction royalty". This was introduced in 2012 and amended in 2019.
The old Mining Act of 2012 (Act No. 15 of 2012) provided that holders of mining permits had to pay "taxes and duties payable under ordinary law" on their overproduction when the quantity actually produced exceeded "by more than 10% the forecast quantity set in the annual production programme approved by the general meeting of shareholders".
The new Mining Act of 2019 (Ordinance No. 22 of 2019) now sets an additional royalty whose rate increases with the extent of overproduction. The rate starts at 4% when the quantity produced exceeds the forecast quantity by 10% and rises to 10% when the overproduction is more than 50%. The tax base consists of the value of the overproduction, i.e. the difference between the actual quantity produced and the forecast quantity, multiplied by the average price.
Updated tax data for 2020 are now available for Gabon, Mauritania and Niger.
In Gabon, there have been no significant changes in taxation (Act No. 014/2019 of 22 January 2020). In Mauritania, petroleum products were subject to value added tax (VAT) at a rate of 18% since 2010. After raising this increased rate to 20% in 2019, petroleum products were finally reduced in 2020 to the standard rate of 16% (Act No. 2020-001 of 10 January 2020). In Niger, measures have been taken to support the hotel sector, notably because of Covid (Act No. 2020-24 of 16 June 2020). Hotels now benefit from a reduced VAT rate of 10% and accelerated depreciation.
Niger introduced two measures to support the hotel sector in its first Rectifying Finance Act, 2020 (Act No. 2020-24 of 16 June 2020). First, the straight-line depreciation rate is increased from 2% to 5% for hotel buildings, in order to increase the deductible expenses for income tax purposes. In addition, accommodation and catering services provided by hotels are now subject to value added tax (VAT) at the reduced rate of 10%, instead of the standard rate of 19%. The explanatory memorandum explains these measures by the Covid-19 pandemic which "affected the occupancy rate of hotels", as well as by the important investments made "on the occasion of the African Union Conference" held in Niamey in 2019.
From 26 to 28 April 2022, a training session on fiscal modelling of extractive sector projects was organised for the National Committee (NC) of the Extractive Industries Transparency Initiative (EITI) of Senegal, in partnership with the Natural Resource Governance Institute (NRGI). Ferdi was asked to present an analysis of Senegal's tax law and rent sharing. The presentation aimed to answer several questions: How has the tax system and related rent-sharing evolved in the gold mining sector? How does Senegal compare with other sub-Saharan African countries? What recommendations could be made to improve the tax system?
Senegal is a country rich in natural resources: the extractive sector represents 38% of its exports in 2020. The country produces mainly gold and phosphate. However, Senegal's former mining act of 2003 did not allow for a sufficient share of the mining rent to be captured. Indeed, the context at the time was marked by low commodity prices. The aim of the old mining act was to attract mining investments by offering numerous tax advantages. But when a new commodity price super-cycle took place in the mid-2000s, Senegal was forced to take measures to increase its mining revenues, which led to the adoption of a new mining act in 2016.
The evolution of Senegal's mining policy reflects the difficulties faced by resource-rich developing countries. Many are torn between the desire to attract investors by granting tax incentives and the disappointment that once projects are launched, revenues do not follow, especially when world prices rise but the tax system is not progressive. In order to avoid having to renegotiate mining contracts, it is important to define an adjusted mining tax regime, which can, among other things, adapt to the evolution of international prices.